"The first is that America imports drugs—on which its citizens spend billions—which it insists must remain illegal, while continuing to allow the traffickers to buy assault weapons freely."

OK, I take exception to that part about "assault weapons", a very vague term in an of itself. This section of the article is implying that U.S. gun laws are directly responsible for Mexican violence, this is ludicrous. If a drug cartel can smuggle a ton of cocaine into Mexico then they can smuggle in a ton of guns. Furthermore places like Columbia further south have active insurgencies with plentiful supplies of weaponry, much of which can fire on full-auto unlike common U.S. "assault weapons" which are only semi-auto.

Again, trying to blame Mexican violence on U.S. gun laws is ludicrous, the cartels can get better guns with less hassle from other places than the U.S.

Apparently, you're unaware that Colombia (and the rest of the world) obtains those weapons from the United States. In 2011 the US engaged in $66 billion worth of arms sales worldwide - the next highest sales by country was from Russia at $4.8 billion.

There wouldn't be (as many) weapons for these cartels to smuggle into Mexico if the US would stop selling the weapons in the first place! There is no McDonnell Douglas in the 3rd world.

Well the insurgencies, rise of violent drug cartels and repressive measures predated Plan Colombia I believe.

FARC and ELN dated from the 1960s.

The Medellin and Cali cartels got their start in the mid-1970s.

I suspect the country has been awashed in firearms of all sorts for some time now, as a result of trends unfolding independently of American assistance provide to the military, police (or even paramilitary - wouldn't be surprised).

Mexican cartels get their assault rifles from the USA: The manufactures in the USA make them and fight through the NRA lobiests to make them easy to purchase. If the USA did not do this, Mexico would not have the ammunition they have to continue this war. Bottom line, the USA along with the NRA are the worst enablers out there. Mexico has it's problems too and the USA exploits this by enabling sales of weapons to a country in a desperate situation. Mexicans also suffer discrimination and ridicule including stereotypes as evidenced in this article. I am very disappointed in some terms used in this article. I am proud to be of Mexican descent and I have known my culture (Mexican-American as well as Mexican) to be a very warm, loving, intelligent culture with a very strong work ethic and an a remarkable ability to retain a sense of humor in the most difficult of circumstances. Also, it is a culture that is misunderstood by so many people who are not a part of it.

Mexico will go the way of the American and Chinese economies. Investment banking knows no boundaries. For Mexicans, it means blending a different type of crook with the white collar crook. The article cites some interesting data, but business models are wrong and you're wrong. Mexico can trade with America as much as China and Canada can trade with America. But the result is the same. Same mistakes, same mistakes that will poison mexico as it did Europe and India, and others. Investment banking. It means the market and business fundamentals take a back seat- globally.

What makes Mexico`s rise the most relevant is the fact that growth is based on industrialization, manufacturing high-tech products, exports, free-trade agreements and education (more engineers graduating that in Germany and other countries).

Mexico is competing with China, Taiwan, Japan, South Korea. Not with Colombia, Argentina or even Brazil, since these countries have chosen a growth model exporting raw materials to China and other asian economies.

There are other considerations: Maybe need to take in supply chain considerations (lead times of less than 3 months), protection of IP and minimizing risk from politics (see tires and now solar panels).
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Addressing the first issue by locating in Mexico may help make products cheaper too (outbound components get to their destination quicker). To be honest, seems like sophisticated components come from a slew of places (S. Korea, Japan, Germany, etc.).

Mexico is not China where the latter is giving US much challenge in many trades. This prompts US to be more protectionist against China.

Perhaps Mexico can do better via faithful collaboration with US and purchase every component from Uncle Sam to avert stock out of essential item affecting production. I dont doubt the ability of the Mexicans to perform quality work same as the Chinese counterparts (who have given up mid day nap already). The author has rightly pointed out his concern about the Mexico's logistical support. Though Mexico is the southern neighbour of US, it does not mean it has the absolute advantage and guarantee of punctual delivery. The road nextwork, the red taps, customs clearance system, control of contrabands, etc. can all be the contributing factors for a slow up or even hold up of the delivery of a consignment. I think Mexican government should have the ability to cope with the challenge, with the determination and capital.

Amid the continuous fiscal problematic time, the Americans might not be a big money spender any more. So, the Mexicans better cant expect too much from the northerners. Mexicans should try their luck also on their neighbouring countries.

At any rate, Mexico still has to compete with China head-on. But, would there be a breakthough chance for Mexico and China to have joint venture? Any clue?

Mexico is a member of NAFTA, so in terms of tariffs, market access, local content requirements, customs and what not, it shares an advantage with Canada.

And while the corruption is there (trails China according to the transparency index), Mexico doesn't have the same kind of politics or industrial policies as China that would concern businessmen in the future (industrial piracy, pursuing a military build up, appearing confrontational, etc.).

The US is the largest economy in world. Combined with proximity, there are considerable opportunities for products from Mexico. And it doesn't take 2 to 3 months to get most types of manufactures out to most places in the US.

Mexico would probably welcome market access to China. Heck, there was a vigorous precious metals trade between Spanish Mexico and Asia for years (16th century to the 19th century). Who wouldn't.

China may want to push some manufacturing to Mexico to dance around protectionist threats. Like Japan did with several American southern states in the 1980s with the auto industry. In a similar situation, Foxconn got pressured into opening a factory in Brazil.

Probably should check out the McKinsey report: "Manufacturing the future: The next era of global growth and innovation"

Provides good rankings, and has an interesting segmentation of manufacturing.

for instance, the chart for "Top 15 manufacturers by share of global nominal manufacturing gross value added" shows the US as number 1 in 2010, China 2nd , Mexico 12th and Canada 15th.

The five segmentations of manufacturing are probably interesting to go over, to shape thinking on investment opportunities in Mexico.

The USA could more profitably partner with neighbouring Mexico, for both to yield the synergistic benefit of a broader, lower-priced rebranded America, complementing US creativity and technology with cheaper labour close by, with assured patent rights.

Drug trafficking has remained a primary obstacle to realising that dream for decades, and now requires a policy change in response to tackle economic terrorism asymmetrically. Strengthening the financial squeeze on drug money requires far closer co-operaiton with Mexican financial institutions and regulators, while reducing demand domestically through decriminalised, legal access to social marijuana in the USA where it should be classed under equal legal restraint as the sale of it's sister weed, tobacco.

Regional growth through bilateral joint trading can accelerate growth into and within both domestic economies, offering jop growth alongside demand throughlower cost access to europe and emerging markets. However, there is no visible sign that the Presidents of either the US or Mexico share such faith in their free market leaders, constrained as each is by the those who funded their election.

Something doesn't make sense here. In the last 6 years the outflow of capital from Mexico has been US$111.3bn while the inflow (FDI) has only been US$65.4bn. In the first 9 months of 2012 FDI has fallen a further 16% but the peso seems to be holding because of a rise of 60% in financial investments from abroad. The whole illusion of "growth and stability" would instantly collapse if US interests rates would rise just minimally, provoking a sudden flight of all those financial investments of lately.

The outflow of US$111.3bn does not take in account the inflow of US$22bn or so each year from migrant remittances, the inflow of US$100 bn or so a year of Oil revenue and other factors, it is just the amount of money that mexicans citizens or corporations had deposited in foreign accounts or invested abroad, so this is not an illusion.

If Mexico's economy is being kept alive by exporting menial labor and raw materials, I believe prosperity is just an illusion. Furthermore, the new president has declared his intentions to privatize Pemex. Given the fact that Mexican nationals seem to be extremely distrustful of their own economy, as shown by the massive amounts of capital they export, quite possibly they would begin sending those oil revenues abroad too.

Take a look at Mexico's largest companies. Almost none of them produce tradable goods and they are mostly sold domestically at monopoly prices. Most exports are produced by foreign companies who use the country merely as a platform to get cheap labor. There are no technology transfers or any such things.

During 2011 the number of companies registered by the social security institute grew by a meager 26.

It's an illusion, a big one. Come to Mexico, take a cab, drive around, ask around.

Mexico has U$210.8 billion in external debt, this amounts roughly 15% of the GDP, considering a media maturity of the bond of 3 years, and the market exchange rate regime, its Treasury would not have a problem managing a surge in the US rates, by itself largely postponed until 2014 in Fed Chairman words. As a sideshow of how confident Mexico Treasury navigates the market remember it is the only Latin country that has sold 100 year bonds at less than European rates.

Mexico economy is not being kept alive by exporting menial labor, recent reports by US inmigration authorities say exactly the opposite: probably there are more mexicans coming back to their country than crossing the border to the States.

Is actually sending the oil abroad what gets those 100 bn into the central bank reserves (now at 162 bn); however the raw materials exportation is a small fraction of what Mexico sends abroad.

The amazing fact is that Mexico manages to do this in spite of the monopolies extorting rents from every consumer, but increased overlapping will get them to eventually compete with each other.

Other than that I invite you to see the R&D centers that those "foreign companies who use the country merely as a platform to get cheap labor", they are there, certainly not an illusion.

If investing abroad is a serious trouble I don't know, certainly the fat cats sending the local originated profits to bank accounts in fiscal paradises is not a problem just of Mexico, even Germany has its share of tax fugitives, and we don't hear the cry of Germans not trusting, their own economy, for that matter, Mexico Bank's have better creditworthiness than their controlling American or European ones.

I wont discuss the wisdom of a taxi cab driver, I wont deny the problems of security, inequality and corruption, but I believe that credit should be given were credit is due: Mexico Economic Advantage is not an illusion; its a great potential expected to be fulfilled.

If you know something about the abuse of euphemism in Mexican political language you'll easily find that info you're looking for. He's been repeatedly saying over the last few months that he'll sell Pemex. Just don't expect to find a literal quote, OK?

Is it too much to get all the facts on immigration history/policy. My grandpa was part of the "Bracero Project." The Bracero Project was the largest Mexican guest worker program in American History, and was enacted in 1942 to help America with the war effort. It lasted until 1964, 19 years after the war ended. This brought my family into the US, along with 4.6 million other Mexican Nationals.

The project was only supposed to last the length of the war, but was continued on two fronts - exploitation and opportunity. When the US needed the Mexican people we were here. When they needed us the most, we were honored to come across and work.

When the project ended, finally, in 1964 (after Kennedy was killed), it was impossible to stop the flow of the exploitation/opportunity on both sides of the border. Immigration reform covers so many other important topics... Foreign trade, jobs, deficit, Foreign policy, economy. It should treated as such.

A great article, thank you very much for pointing out the benefits to the US of engaging with mexico as more than "the place where drugs and immigrants come from." I do have to point out though, "wetback" is a pretty offensive term and I'd suggest not using it in articles in the future. One would not say "even America’s “nigger”-bashing Republicans should now see the need for (lets say) affirmative action." Border-hoppers was another example but it is not as offensive as it is not a commonly-used pejorative. I understand the intent of framing the Republican position but there are better ways of doing it. Thanks!

I agree that The Economist should refrain from using pejorative and unacceptable terms to describe Mexican nationals who are in the United States.
Remember that with the North American Free Trade Agreement (NAFTA) North America goes from Canada's Arctic islands to Mexco's fromtier with its Central American neighbours, and we are becoming increasingly interrelated.
In that context, Canada also wants Mexico to do well, as it can then buy more of our exports and can sell to Canada goods and services that we need.

It is time that the resource rich Mexico allows some trickle down to create a healthy middle class, and they will pass up the US as our government destroys our middle class. Before long we will be skipping across your border for jobs. There is nothing wrong with a strong North America. What a wonderful thing it would be to have a healthy and wealthy Mexico, U.S. and Canada. Hey let's throw in Central and South America also. A stable economy starts with a stable middle class.

Mexico has had a middle calss since some time now, it developed more since the "Mexican miracle" in the 40´s and 50´s and have been growing since. I can tell when the situation of migrants got bad, for both Mexico and the US, during the 80´s and 90´s economic crisis, and even that has been getting better because less ppl are migrating and we like it, because even if you cant even guess or understand it, most migrants would rather not leave their family to work in an extremely unfriendly and often abusive eviorment, but do so for an economic need. Not different from when the Europeans did after WW1 and WW2,or even some US citizens did during your Civil War and even now, with your economic crisis.

North America is a nice idea to say at politicians meetings but it has never been a reality and with the actual state of relations it will never be, We do have an economic relationship but that´s it and economy alone will never be enough to form an interegional identity IMO.

And really most Mexicans dont look out to be part of the "North American Continent" it doesnt even exist for us, there´s the American continent and every country in there is part of it even if some are from the north, center or south. We rather would like more being part of a multicultural world because that has always being part of Mexico´s pov. Mexico was born out of the mix of cultures, races and languages from pre-hispanic civilizations,latin European especially Spain and France, and even some African and Asian. and is reflected in arquitecture, in the people, in the traditions,music,even in our blood and genetics.

As for Central and South america, yes ,we would very much like to get back our good relationship with our "counsins" in fact is neccesary from a political, economic and security pov not just for us but for them as well, that is what the Pacific Alliance and Celac are about in a way, but is not all there is to them . Also that doesn´t mean Mexico can´t at the same time have other relations, curiously enough with Mexico has adapted better having bussines with the Asian nations with which Mexico used to trade back in the day 500 years ago. is a curious but interesting coincidence.

CONGRATULATIONS ON YOUR ARTICLE, AS A MEXICAN LIVING IN MEXICO, I FIND IT EXTREMELY ACCURATE. I JUST WANTO TO COMMENT ON YOUR STATEMENT ABOUT US BEING TOUCHY ABOUT THE PRESENCE OF U.S. OFFICERS IN OUR TERRITORY WHEN CANADA HAS NO PROBLEM WITH IT. REMEMBER CANADA HAS NEVER BEEN INVADED BY U.S. TROOPS, WHILE WE DO HAVE SUFFERED THAT EXPERIENCE. GUESS IT STILL HURTS.

Then there were tensions out west when both Britain and the US ran the Oregon territories together.

And some Irish tried some raids at times.

Bottomline, the formal invasions ended in failure. Seems the US wanted to forget about them, and hence the low visibility given to these events.

Also seems the British and Canadians doen't play them up as much as other countries do when successfully repelling invaders.

Maybe due to a sense of vulnerability? Maybe due to a better sense of politeness? Or due to the fact a bunch of Americans other than Tories came north for land in the 1790s/early 1800s (since NY and other places were screwy)?

You were right the first time. Canada as a country has never been invaded by the USA. In 1812 the Americans invaded a British colony. Canada did not become a country until 1867 with the passing of the BNA Act by the British Parliament and the resulting confederation of three British colonies.

I was being ironic, in reality Mexico has laws that limit the number of foreing agents it can let pass or be active on its soil, also Fast and Furious was a very tragic and confusing experience that involved US agents which make Mexico even less open to the idea of changing those laws.

Right, I agree. I hope we can take advantage of all the technology we will have at hand and support all the new ingeneers the technological schools are graduating to develope our own technology. We really need to be more confident of our capacities and possibilities.

China never gave much intellectual property protection and requires JV's of foreign and Chinese companies. That is how it trully learned from these foreign companies and developed it's own tech companies.

We've been so respectful of foreigners and just exchanged cheap labor for jobs. I dont know if this strategy will payoff for Mexicans. Of course there are other good effects of all these FDI's such as that most suppliers to these foreign multinationals are Mexican so new companies have been starting or growing. That's good but that is no unique technology development.

We've been attracting FDI for decades now and we haven't develop our own tecnology. We need to develop our own tech not just copy cat foreigners if we want to progress. Look at Korea, Taiwan, Singapore.

I rather measure technology development by number of patents and applied patents instead of number of engineers.

Right now many Internet and mobile startups are starting in Mexico and hopefully a Venture capital ecosystem is developing (I have one startup for instance) but most of these startups are just copy cats of American startups. Why can't we come up with our own ideas? My whole point here is that we need and we can develop our own technolgy and "conquer" the world with our companies that are solving needs that no other company in the world is solving as well as our companies. I will try to teach this by example. Mexico will have its tech company as Big and innovative as Google is. Every statrtup starts small though, by reaching product-market fit.

At the time of Mexico´s Independence from Spain in 1810, it had a larger territory than the U.S., including not just California and Texas, but also the rest of the South West and Central America (with the exception of Panama, which was part of Great Colombia)...even if was not as large as the Spanish Viceroyalty of NEW SPAIN which also included the Philipines, Cuba, Santo Domingo, Florida, Puerto Rico, Guam, Marianas and Caroline islands.

If the Viceroyalty of New Spain had kept its unity, right now its population would be about 300 million people.

With due respect to Hidalgo, Morelos, Moreno, Mina and the others who rose and fought after 1810, of course, but their declarations of independence were local. Real independence came in 1821 with Itúrbide, Guadalupe Victoria &c.

The rise of Mexico will be established when their education system will be improved. if you want to compare two nation and economy you have to start and finish with the university. How many mexican universities has the profiles of the US universities?www.fistic.eu

Mexico produces more engineers than the US, even though it has 1/3 of the population.
You can argue that American engineers have a better education, and it may be true. But that advantage will erode with time.

This article has it backwards. This reduces the pressure for immigration 'reform'. Fewer immigrants, legal or otherwise, means less need to 'reform' immigration. The U.S. already gets a million a year. That if far more than any country on earth and more than enough. Get in line or get to work on improving your own countries.

I agree with your comment. "Get in line or get to work on improving your own countries." The article is accurately biased in the sense it gives sympathy to the illegal immigrant group. The Economist is incorrect when linking illegal immigration with immigration.

It is absurd to many Americans that those who broke American law are being considered a path toward citizenship. Last time I checked the largest share of illegal immigrants come from Mexico. How much money do illegal immigrants cost the American taxpayer? One of the USCIS criteria for immigrating to the USA wants to make sure immigrants will not become a public charge. So The Economist article here favors a more porous immigration border. Americans can only disagree more.

Good luck with their nation? Which country? US or Mexico? We have dual nationality as I said it before. I pay taxes both in Mexico and in the US. The US is the only country that taxes world wide income and I pay my taxes accordingly. I have homes in both countries and even though I live in Mexico I travel back and forth, pay taxes, pay for my son's college (no scholarship) and my ex wife's alimony (daughter of the American Revolution). Stereotypes don't work as well as in the past. Get over it! Mexico is not what it was and the US either. For good or worse we are neighbors and we need to accept this (or not and accept the consequences, if not just ask the Republican Party in this past election).

I am tired of US citizens refering to their country as America. America is not a country, America is a continent. US is in NorthAmerica as well as Mexico and Canada. So how come US refers to their country as America??

Mexico should not aim to become the workshop of the US. Mexico should change its strategy from the current "cheap labour manufacturer of foreign technology" into a world class technology developer, only then would wealth and progress reach the whole of the Mexican society. How can the level of life rise for Mexicans when their competitive advantage is cheap labor?

The way it works is that first we manufacture technology for others, THEN we learn how to create our own technology companies. This in fact is already happening; perhaps you haven´t noticed because it´s still in an early stage.

China never gave much intellectual property protection and requires JV's of foreign and Chinese companies. That is how it trully learned from these foreign companies and developed it's own tech companies.

We've been so respectful of foreigners and just exchanged cheap labor for jobs. I dont know if this strategy will payoff for Mexicans. Of course there are other good effects of all these FDI's such as that most suppliers to these foreign multinationals are Mexican so new companies have been starting or growing. That's good but that is no unique technology development.

We've been attracting FDI for decades now and we haven't develop our own tecnology. We need to develop our own tech not just copy cat foreigners if we want to progress. Look at Korea, Taiwan, Singapore.

I rather measure technology development by number of patents and applied patents instead of number of engineers.

Right now many Internet and mobile startups are starting in Mexico and hopefully a Venture capital ecosystem is developing (I have one startup for instance) but most of these startups are just copy cats of American startups. Why can't we come up with our own ideas? My whole point here is that we need and we can develop our own technolgy and "conquer" the world with our companies that are solving needs that no other company in the world is solving as well as our companies. I will try to teach this by example. Mexico will have its tech company as Big and innovative as Google is. Every statrtup starts small though, by reaching product-market fit.